Trying to sell high value products has been a pressure-cooker for banks for many years. Admittedly, it’s taken quite a while for the extent of the payment protection insurance (PPI) mis-selling scandal to become apparent. Worringly, though, the consequences are still manifesting themselves, and the culture that has encouraged this over the years is showing no signs of abating.

Firstly, let’s look at the recent PPI situation. Ombudsman News has revealed that the service is now receiving as many as 1,500 new related complaints every day. This has taken the total number to over 400,000, with PPI related issues now comprising over half the total number of referred cases.

Many customers who took out credit cards, mortgages or loans have complained that they were unduly pressurised into taking out the additional insurance, or else that they were sold policies that did not accurately reflect their situation. And with banks rejecting a vast number of complaints, disgruntled customers continue to take their cases to the Financial Ombudsman Service, which becomes the legal arbitrator.

The cross-section of sample case studies in the recent August/September bulletin details a number of upheld complaints. Issues included:

Over-zealous advisers;

Poor recommendations;

A failure to provide the lower costs of a product without added protection;

Policy documents detailing restrictions arriving only after the policy was agreed.

There were also several examples of failed complaints. A customer who received a smaller refund than expected following the early repayment of his loan decided to complain that his PPI policy had been mis-sold. However, a recording of a telephone conversation with the provider revealed that he had been specifically warned about the refund details twice and still agreed to the policy.

In some cases, then (as we’ve seen before with ISAs), the free service is being exploited by consumers for hapless grievances, which means that it remains more heavily burdened by PPI than it otherwise might be.

Salespoints and Bullying

But the culture that has driven this trend of mis-selling is still prevalent, it seems. The Financial Services Authority has recently spoken of its desire to rid ‘poorly designed incentive schemes’ that encourage mis-selling practices and drive managers to deliberately prioritise sales at the expense of conduct.

Its report last week, which criticised the culture of British banks, found that basic salaries for hard-working sales staff could vary by over £10,000 per year depending on their sales performance.

And a number of Lloyds employees have come forward to spill the beans on the culture of bullying that is rife at the bank. Staff are incentivised by a system of ‘salespoints’ for different products and are pressurised to hit targets, fearing the sack if they don’t achieve enough in sales.

A spokesperson for the bank responded: “We have a clear incentive framework for colleagues that ensures we reward behaviours that are focused on achieving correct customer outcomes and excellent service.”

But this is clearly disingenuous. With many stronger-performing products available online and commanding no ‘salespoints’, there is a clear deterent to guiding customers in the right direction.

Furthermore, the ‘weighting’ of certain products over others severely compromises the integrity of institutions’ claims to offer impartial advice in the best interests of their customers. It is little wonder that only a third of consumers now claim to trust their bank. And, of course, it’s not as if bank staff aren’t aware of what they are led to do.

“Banking advisers and business managers are often reduced to tears by the demands of people in charge in my area”, a member of Lloyds staff told The Sun. “And staff don’t believe HR will help if you contact them.”

The revelation is an embarrassment for Lloyds’ chief executive, Antonio Horta-Osorio, who recently criticised the culture of aggressive sales targets and said that banks should become ‘simple’, ‘boring’, and customer-orientated.

The FSA believes it’s down to firms themselves to set the change in motion. Its Managing Director, Martin Wheatley, said that the responsibility lay at the top level of financial institutions:

CEOs are ultimately accountable for the way their staff are incentivised, so we expect them to take a real interest in fixing this.

Martin Wheatley, Financial Services Authority

Evidently, that’s wishful thinking. Without regulation, one suspects, the only thing that will force a change is if ethical and challenger banks are able to cause a huge drop in footfall. After the revelations this year, consumers will no longer tolerate the idea that their bank is deliberately misleading them, and this is arguably a more significant blow for customer relations than the Libor rate-fixing affair.

But it is true that we’re now in an age (as Ombudsman News points out) where the ability of awareness to spread is faster than ever before. And such flagrant duplicity from the top brass might just threaten to topple the bank faster.

Why should taxpayers be propping up banks whose modus operandi is to push products on us that we don’t need? Tread carefully, Lloyds TSB, and change quickly.

bullying staff to sell unsuitable products to customers within lloyds banking group is rife this was reflected in their last colleague engagement survey which was then withdrawn alltogether as it did not provide the answers the bank wanted. Advisors in tears in an everyday occurrence as is the daily threats of dismissal if you do not sell the products the bank want sold ie loans credit cards etc in preference to the products customers want or ask for. The majority of staff would happily leave but the absence of jobs stops them doing this and this is used as a big stick to beat staff with and continue the cycle of ripping off the customer

David Sanderson

Even walking into a Lloyds TSB branch is an ordeal, I only do so to use the cash machines and get out as soon as I can, if you go to a cashier you invariably end up being ushered into a booth or office where the staff just won’t take no for an answer, I just go in and out of the branch, withdraw my money and leave, abysmal service and no way to treat customers.

Keith McDonald

Thanks for your comment, David. Sorry to hear that just withdrawing cash has become so harrowing. I used to notice it at Nationwide as well, though it wasn’t nearly as aggressive as some of the testimonies I’ve heard about other banks.

It’s difficult not to have a modicum of sympathy for floor staff, given the pressure they’re under. But it’s certainly no way to run a bank, and Barclays – for all their many faults – are doing the right thing by altering their pay structure to reward customer service rather than sales. This insatiable thirst for sales is only going to push customers straight into the hands of consciously customer-focused banks.

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